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Photos: Justin Sullivan via Getty Images

Executives at home improvement retailers say they're not worried about the slowdown in home sales — because they think customers that are staying in their houses longer will need to buy supplies to patch them up.

Yes, but: While Home Depot and Lowe's are banking on consumers reinvesting in the homes they already have, some experts say it's not clear that boom in remodeling will actually happen.

What they're saying: Executives at Home Depot and Lowe's — the two biggest home improvement retailers in terms of revenue — said on earnings calls this month that weak housing has nothing on the strong consumer.

  • Marvin Ellison, Lowe's CEO: "Home price appreciation ... continues to encourage homeowners to engage in discretionary projects. The average age of the homes in the U.S. is 40 years, which creates an attractive opportunity for our project categories that support maintenance and repair."
  • Carol B. Tomé, Home Depot CFO: "With rising interest rates, consumers are [incentivized] to stay in their home, and they have wealth in their home and their home is aging, and so they’re spending money on their home."
  • Strong demand for new and existing homes has historically helped drive sales at Home Depot and Lowe’s.

The other side: A recent study by Harvard University's Joint Center for Housing Studies predicts the pace of home remodeling is expecting to slow, not accelerate, next year.

  • “Low for-sale inventories are presenting a headwind because home sales tend to spur investments in remodeling and repair both before a sale and in the years following,” Chris Herbert, managing director of the Joint Center for Housing Studies, wrote in the report. 
  • Cheryl Young, a senior economist at Trulia, told Axios she sees no indication that a softening housing market will lead to more renovations. "Even if a home sale happens, [homebuyers] will see more of their money going towards a mortgage and less available for renovations," Young adds.

What's going on: Rising rates are upping borrowing costs for would-be homebuyers.

  • The average 30-year fixed rate mortgage spiked to 4.83% in October, according to Freddie Mac, significantly higher than the 3.9% average rate in 2017.
  • That's not the only thing plaguing housing. Tighter housing inventories are contributing to higher prices in markets across the country. Wages are rebounding, but they still trail housing price inflation, per Reuters, making affordability more difficult.

By the numbers: Home sales rose slightly in October after a six-month streak of declines, but fell 5.1% on an annual basis — the biggest drop since 2014.

  • Lawrence Yun, a chief economist at National Association of Research, which puts out that data, said housing demand has weakened in the wake of higher interest rates.
  • Homebuilders completed the fewest projects in a year last month, per the Commerce Department, while single-family homes — the biggest share of the housing market — dropped for the second straight month.

Go deeper

Trading platforms curb trading on high-flying Reddit stocks

Major trading platforms including Robinhood, TDAmeritrade and Interactive Brokers are restricting — or cutting off entirely — trading on high-flying stocks like GameStop and AMC Entertainment.

Why it matters: It limits access to the traders that have contributed to the wild Reddit-driven activity of the past few days — a phenomenon that has gripped Wall Street and the country.

2020 was the economy's worst year since 1946

Source: FRED; Billions of chained 2012 dollars; Chart: Axios Visuals

One of the last major economic report cards of the Trump era lends perspective to the historic damage caused by the pandemic, which continued to weigh on growth in the final quarter of 2020.

By the numbers: The U.S. economy grew at a 4% annualized pace in the fourth quarter, a sharp slowdown in growth compared to the prior quarter. For the full year, the economy shrank by 3.5% — the first annual contraction since the financial crisis and the worst decline since 1946.

Dion Rabouin, author of Markets
3 hours ago - Economy & Business

How GameStop exposed the market

Illustration: Eniola Odetunde/Axios

Retail traders have found a cheat code for the stock market, and barring some major action from regulatory authorities or a massive turn in their favored companies, they're going to keep using it to score "tendies" and turn Wall Street on its head.

What's happening: The share prices of companies like GameStop are rocketing higher, based largely on the social media organizing of a 3-million strong group of Redditors who are eagerly piling into companies that big hedge funds are short selling, or betting will fall in price.